When South Dakota began dabbling in the EB-5 visa investor program in 2004, the U.S. Customs and Immigration Service assigned the authority to administer that program to the South Dakota International Business Institute, a subentity of the Board of Regents operating on the campus of Northern State University. But by 2013, the program was run by SDRC, Inc., a private company created by SDIBI director Joop Bollen in 2008. How'd that change happen, and was it legal?

Among the great piles of documents the Legislature's Government Operations and Audit Committee will begin reading in their opening EB-5/GOED hearing on Friday is a Memorandum of Understanding (MOU), dated Janaury 15, 2008. I present images of that MOU's five pages here:

But if courts can buy the argument that pieces of paper like this memorandum can make Joop Bollen into two separate legal persons who are not responsible for each other's actions, then let's look closely at the language of this piece of paper. The memorandum reminds us that SDIBI was an approved and designated EB-5 Regional Center. As far as I've seen, SDIBI is the only South Dakota entity ever so recognized by Customs and Immigration and Homeland Security. The MOU says the SDRC Inc. was "organized for the purpose of creating an EB-5 Alien Entrepreneur Investment Project withinSDIBI" [emphasis here and subsequently mine]. The MOU says SDIBI's director will have amongst his/her principal duties and responsibilities the ongoing coordination, oversight and liaison" for EB-5 recruitment. The MOU says SDRC Inc. will provide "assistance" to the EB-5 project "within" SDIBI.

This language suggests that SDRC Inc. was to operate as a subsidiary of SDIBI. Paragraph 6 does declare that SDRC Inc. "will act in an independent capacity and not as officers or employees of SDIBI/DEDR or the State of South Dakota," language intended to shield Bollen and the state from scrutiny and liability. But the overall language of the MOU makes clear that SDRC can engage in EB-5 activities not by dint of its own designation as a Regional Center but only in its subsidiary relationship to the Regional Center of record, SDIBI.

Here's the problem: SDRC Inc. continued to do EB-5 business under the Rounds and Daugaard Administrations even after SDIBI ceased to exist. Joop Bollen quit his job as SDIBI director on December 21, 2009. He took nearly all of SDIBI's EB-5 records. The next day, the Department of Tourism and State Development contracted directly with SDRC Inc. to conduct EB-5 activities for the state. In that contract, signed by Bollen (not Park) and DTSD Secretary Richard Benda (there he is!), the Department erroneously claimed unto itself the Regional Center designation that USCIS issued specifically and solely to SDIBI.

It thus appears that SDRC Inc. engaged in EB-5 activities without legal authorization. The contract under which SDRC Inc. operated from December 22, 2009, to September 19, 2013, came from a state agency that did not have the authority to grant it.

Great job Cory, you obviously have gone over this with a fine tooth comb. So...a an MOU is similar to a "letter of intent" and it is not, in and of itself, legally binding...It is a BILATERAL agreement dependent on "offer, intent, consideration, and acceptance"
Who are the bilateral entities? SDRC Inc and SDIBI (and aren't they one in the same or is the State of SD an agent for SDIBI)

What is the offer? Is it that SDRC Inc will be a third party administrator of sorts...similar to what managed care is to a health insurance company? In health care they act more like parasites than a partner. A managed care company has no fiduciary duty to the clients

What is the intent? Give me your best shot here Cory as I can't figure it out (or I don't want to believe what Im thinking)

What is the consideration? Consideration means something of value...usually money. But in the MOU it looks like the consideration is that SDRC Inc will do all the grunt work involved for the EB-5 requirements, if SDIBI tells the Immigration Service that SDRC Inc is now in control.

Who accepted this MOU? James Parker and Joop Bollen? Seriously?

Ok..so then did Rounds and Daugaard just start doing business with SDRC Inc...giving away tax money and tax credits for SEVERAL failed projects...(not just Northern Beef, that one just happens to have a man commit suicide and the only ones who believe that are the Administration Loyalists) allowing shady international transactions between Communist China, the Cayman Island, the Philippian, Korea, and others..... just because of this document? There must be other supporting documents that gave them this authority other then a glorified gentleman's agreement....help me understand this....

With all due respect for you as a person and your past posts on this issue, essentially saying that those on the left who have been saying that there is something rotten in Denmark with the EB-5 program and most other economic development programs ever since Mike Rounds took over as Governor, what say you now Mr Troy Jones?

The day that the Republican party decided that because Steve Kirby and Mark Barnett were bad people because they threw some mud in the campaign, (something with which I disagree but also something done by almost all sides in politics, now days,) and that then Mike Rounds was so squeaky clean that we should have him for Governor, is essentially the day all of this started and the day that integrity within the Republican Party and South Dakota State government went out the window.

To compare either Mike Rounds or Dennis Daugaard to Bill Clinton and his nickname, "slick Willy," would be shorting the nickname "slick Willy."

Lora, you ask the questions that the Legislature needs to ask in its opening hearing on GOED/EB-5 on Friday.

SDIBI = SDRC Inc? Realistically, yes. Joop Bollen ran both of them. Legalistically, no, they are separate entities from each other and from Joop Bollen, as made clear by the weird California court decision in the Darley case (see bottom of article linked above) in which a judge ruled that California consulting company Darley could not haul Bollen and SDRC Inc. into arbitration for failing to follow through on a contract Darley had with SDIBI.

Offer? I'm not sure anyone was offering anyone anything. Bollen seemed to be covering the legal b ases necessary for USCIS not to freak out when it started reading reports headed "SDRC Inc." instead of "SDIBI".

Who accepted? Park and Bollen are the signatories. I'm still looking for the document in which USCIS says SDRC can do EB-5 instead of SDIBI, rather than simply within or in support of SDIBI.

Lora, Cory, sigh, courts usually treat MOUs as binding contracts . . . because they usually are: offer, intent, acceptance, consideration, et al., Drafted lacking the elements they are not an MOU, merely a facade. (Extra credit for French?) Tap MOU & court into your local Google machine. Or MOU & court & appeal. MOUs are bilateral. LOIs are unilateral so are often worth the paper on which written.

Cory's exceptional investigation here appears to finally drown Jackley's elementary "investigation" in the dog vomit from which it apparently emerged. An investigation should include the apparent violation of the fiduciary duties of the members of the Board of Regents, the GOED and its board members, and the usual suspects: 2 governors, perhaps their chiefs of staff, now the AG (what did he know, when, and what was done or not done about it), and that Bollen.

The company had $25 million in state government loans waiting since 2010 but never met the conditions to receive the money. After the April lay-offs, the plant continued to operate while more money was sought, such as through another round of EB-5 loans.

1.Didn't the Governor authorize one last payment (from where I am not sure) after he ended the relationship with NBP?

2.And, if there were folks working at the plant, why didn't NBP qualify for the 25 million in previously approved loans? Isn't that what forced the bankruptcy in the first place, not having enough funds for operating capital, in other words, purchases of more live cattle and paying the workers for the work?

Grassley's only concern is being able to tie this into the Obama administration so they have ammunition for impeachment. He couldn't take the time to investigate dumb bass dubya-we can't tie Bushie's hands,we are at war.

Not referencing this matter but what is common in business. Often (with good or bad intent, depending on the rationale) businesses transfer rights or property from one corporation to another. Because there are so many legitimate reasons, I would suspect that less than 1% have at their core nefarious intent. And, in many cases if not most cases, the two corporations have even common ownership or identical ownership whether or not they are related (parent-subsidiaries) or affiliates (sister corporations).

With regard to whether the right to be an EB-5 entity is a contract right asset able to be transferred to successors/assigns without permission of the issuer (CIS) also depends the law, administrative rules and agency practices and protocol which your thread doesn't provide any information.

Finally, it is possible for the same human to act as the fiduciary of two different legal entities.

Let me give you a real world example. I have two separate companies. I am President of both companies. One my wife and I own 100%. The other we own 80% with my children owning the other 20%. The revenue of the two companies is clear but they both technically share the same office and all my business expenses. Each year, I have to determine how to allocate those expenses. The IRS doesn't care as they are both Sub-S corporations (maybe they do a bit if I was doing something with the intent to avoid gift tax limits/inheritance law) and the net income flows through to the individuals for tax purposes. But, I have an obligation to be fair to my minority owners so I can't "overcharge" the business they have an interest. But, I also have an obligation to be fair to myself/wife and don't have to over-charge the company we own 100%. I know of people who manage this same scenario where they are majority owner of one company with one set of partners and the minority owner of another company with another set of partners.

My point: There are a lot of people who "talk to themselves" in representation of two different entities. This "conversation between self" might indicate something untoward or it might have legitimate rationale.

For the record, I am not inclined personally to give the benefit of the doubt to Bollen. I just don't see this document as giving enough information to make a conclusion. Depending on my intent/disposition, I could write a legitimate justification for both something legitimate or nefarious based on what I know from the public record regarding this. In both cases, it would sound reasonable but I would be speculating in both cases.

You are absolutely correct in your last sentence Mr Jones, and for that I apologize if any offense was taken for my previous post. I too am speculating. I just feel like the smell coming from the State's involvement in economic development is suffocating. The bit today about the thirty million over three years toward economic development, is just another example. They can't fund education at levels to make up for the cuts from previous years or expand medicaid at a mere 2 million, that would bring in a couple hundred million and hopefully start to cut the overall cost of healthcare, but they can project 10 million a year in funding for an economic development slush fund. I fail to see the logic.

The logic is simple. The ability of our State to fund what it does depends on the vitality of the economy today and into the future. To the extent the State can stimulate economic development enhances the present and future ability to do what it does and maybe more. When you look at how our state has performed economically relative to most of the rest of the nation over the last 30 days with relatively less economic development resources provides evidence we are doing a lot of things right.

Not sleeping. First, I'm not making the assertion that it isn't successful. I think the research to make your assertion is your obligation. Second, these efforts aren't measurably in real time. Mickelson started the aggressive wide-spread pursuit of broad development (vs. the larger fishing of Janklow, ala Citibank). The definitive assessment of his efforts weren't clear until long after his term ended but if you look at the success of the REDI/Future Fund/other projects done during his administration and where they are today and the multiplier impact of those endeavors, it is pretty hard to say the successes way exceeded the failures. In all reality, assessing the Rounds efforts will not be definitive for years.

The big and meaningful whether it be economic development or education initiatives etc. are never truly measurable definitively until years later. It took us 5-10 years to say No Child Left Behind was a step backwards.

My new saying: Unrealistic expectations is premeditated resentment. If you think you can assess Rounds 2010 Initiative definitively or only in context of Northern Beef Packers (which was a failure), you are mistaken.

Premeditated resentment? That's a new one Troy. We must now wait 30 years to judge rounds? Mean time, we just take whatever happens? Do you eat Hutterite turkey? I have, before.I still can't get certified beef. How much did Joop and sveen pay themselves? That's what we really want to know. And was it above board? All indications say no.

I think we can make interim judgments so long as we are open (both ways) to adjust thinking as things fully mature.

I think it wholly unjust and selective to form an opinion on one instance that serves a preconceived opinion (Rounds is bad and only present NBP as evidence).

I could go into the specifics of individual projects if I had the time and thought it would make a difference to anyone here. However, there is a burden on the people making the charge as well and they must do in the face of the global evidence: South Dakota has for over a decade out-performing the nation and region on non-agricultural job growth and wage growth.

Unless government is wholly impotent, to some degree the credit goes to those in charge and the policies they propose. If government is wholly impotent, then we should all advocate for smaller government and keep our tax dollars in our pocket.

Troy, I asked you for some of the economic development programs that have shown success in the last ten years. In the past on this blog, I have pointed to some of the things that I thought were failures and a cost of taxpayer dollars to pursue. For this listing I will not include DM&E because its expansion was pursued prior to the Round's election in 2002.
1. The CAFO dairy operations, two of which went bankrupt and were/are more environmentally polluting, than would have been smaller dairy farms for our own local farmers as opposed to the Europeans that were attracted by EB-5
2. The Big Stone II Power plant, under Ottertail Power, which ended when the Minnesota PUC said it was not feasible with the reduction in pollution mandated by their environmental laws plus the cap and trade or cap and tax that would or might be mandated by the US EPA.
3. The Selby Basin Electric Power Plant which was also to be coal burning and went by the wayside for the same reasons as 2. (I might add that I monitored some of the meetings of the tourism department out at the University Center, for South Dakota Clean Water Action, over the phone and internet, Why you might ask and not at my home? Well we have an open meeting law in this State, but in order to make it as difficult as possible for the public to be able to attend, it had to be out there????)
4. Keystone Pipeline
5. Anderson Seeds.
6. Hyperion
7. NBP
8. Keystone XL breezed through in SD no problem, but so far other States have not been so easily impressed.
I say again as I have before, it is not just that these were all failed projects, but there was a lot of taxpayer dollars spent on promoting them and there were a lot South Dakota State employee man hours spent at working on these projects.

I remind you, that at the same time that our US Senator Thune was working to get the tax credit program extended at the federal level, for the wind industry and our two States to the East Iowa and Minnesota with less wind to harvest were building wind towers with State incentives and our State government would not lift a finger to get things going here.

And as far as No Child Left Behind is concerned, there were those of us who new it was disaster from the start. I was a reading mentor along with more than 200 other volunteers at Hawthorne Elementary here in SF, when it went on the books. When Hawthorne failed the reading portion for the third year in a row, I went to a school board meeting, concerned that they might be considering firing teachers as mandated by NCLB. When I raised my concerns, Mr Harris, who was then superintendent assured us not to worry, because they were aware of the rotating populations of non English speakers, as well as children of poor and single parent families and how hard the teachers worked there. Those teachers are among the hardest working in the city and state, but like all of the teachers in SD, are second class citizens as seen by the recent legislatures and governors.

Troy, You wrote, "However, there is a burden on the people making the charge as well and they must do in the face of the global evidence: South Dakota has for over a decade out-performing the nation and region on non-agricultural job growth and wage growth."

When you look at the growth of Sanford Health as well as the expansion of Avera to compete with Sanford, I am sure that you will find a large portion of that growth and the subsidiary growth around it, none of which can be attributed to the State Government of South Dakota. In fact, right now for a couple of million bucks the State could be getting another couple of hundred million dollars of healthcare expenses and help to bring down the cost of healthcare, while improving the health of our citizens at the same time. But they don't want to take a chance that ACA might succeed.

If you want to give the Rounds administration credit for the Homestake Lab, okay, but T Denny Sanford had a lot to do with that as well, and the jury is still out as to whether that will reap any rewards for the State.

Troy, your observation that South Dakota outpaced the nation in job and wage growth in the past decade has no meaning contextually. If it did, we wouldn't constantly bemoan the fact that a serious shortage of skilled labor exists now and is likely to become more acute in coming years. That South Dakota wasn't subjected to the severe economic reversals of the past several years puts our state in a "bubble" that makes comparisons to more urbanized, industrial states with huge pools of manufacturing workers meaningless. If things are as rosy as you make them appear, Governor Daugaard shouldn't have to be scrambling to entice workers to migrate here. Why do you suppose South Dakota makes for such an unappealing option to workers who'd consider moving to pursue their careers?

John, the truth that Troy and many so called pro-business Republicans, including all the governors for at least the last 30 years, refuse to admit is that any labor shortage in South Dakota would be easily solved by increasing wages. It's called supply and demand. The people with marketable skills that are needed in SD aren't going to come here because of pheasant hunting or walleye fishing opportunities. They have one demand "show me the money." The businesses in the ND oil patch have learned this lesson.

I know, I'm trying to enlighten my fellow Pubs, Nick. We're supposedly such a business and free market-oriented group yet some of us fail to grasp that labor is a commodity and just as subject to the laws of supply and demand as any other commodity.

Lanny, good list of economic development projects. On EB-5 specifically, include the Veblen Dairies as an example not just of economic failure but of environmental damage, immigration problems, and economic harm done by driving more small diaires out of business.

While Lanny is working hard, I should go back and challenge the challenge to which he is responding. Troy said, "First, I'm not making the assertion that it isn't successful. I think the research to make your assertion is your obligation." I agree that we all have an obligation to back up positive claims that we make. But when we're talking about public policy, from a conservative position, the person saying that government should spend money and take action on Policy X has more of an obligation to present evidence to support that position than the person who wants no government spending or exertion in that policy area. Government should not take the position of "We're just going to keep doing stuff until you prove we shouldn't."

The author notes that there is no specific prohibition in the law as it relates to the transferability of an RC or its designation. However, because USCIS has the absolute authority to designate an entity as a “Regional Center,” it would stand to reason that one could not sell the designation (the asset) between entities, as by doing so the seller would, in effect, be designating a new entity as an RC, which it does not have the authority to do. Correspondence between the author and USCIS, in respect to a specific attempt to transfer designation to another entity, supports this position:

"The issue in this case is whether or not a regional center can sell its regional center designation as an asset to a separate entity … the regulations do not indicate or support that a regional center can sell its regional center designation as an asset to a separate entity" [Jeff Campion, Transferability of Designated Regional Centers and Its Designation," EB5investors.com, 2013.11.12].

Campion thus suggests that the best-written MOU or LOI would not allow a regional center to hand its USCIS designation over to separate legal entity without explicit USCIS action, any more than DSU could transfer its operations to Citibank to operation as a private training center without action by the Legislature.

Nick's approach to economic development is much simpler: pay workers what they are worth. It requires no government intervention other than establishing a living minimum wage. It requires no complicated corporations within corporations playing middlemen between investors and companies. It creates no hidden opportunities for government functionaries to skim and launder money.

This is more info and relevant. One more question to definitely make your point the entity transfer is illicit. See if the prohibition is to an entity that is an alter ego or substantially an alter ego.

Troy, does the alter ego issue matter if the courts have already recognized SDIBI and SDRC Inc. as legally separate entities? (Again, see the Darley case, in which SDRC Inc. was found not to be bound by any agreements signed with other parties by SDIBI.)

I understand, Troy: we're both reaching beyond our normal areas of expertise. Darley seems like a crazy ruling, but it establishes that Joop Bollen is not Joop Bollen, that SDIBI and SDRC are legally distinct entities.

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